Legislature(2013 - 2014)SENATE FINANCE 532
04/02/2013 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB86 | |
| SB59 | |
| SB63 | |
| SB13 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 63 | TELECONFERENCED | |
| + | SB 13 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 86 | TELECONFERENCED | |
| += | SB 59 | TELECONFERENCED | |
SENATE BILL NO. 59
"An Act relating to approval for oil and gas or gas only
exploration and development in a geographical area; and
providing for an effective date."
9:11:14 AM
DANIEL SULLIVAN, COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, provided an overview of the legislation. He
believed that the issue of permitting reform and the effort
to modernize the permitting process was critical for the
future of the state, as well as the issue of Trans-Alaska
Pipeline System (TAPS) throughput. He related that
Department of Natural Resources (DNR) had been focused on a
four part plan to help turn around TAPS throughput: making
the state more competitive; incentivizing and facilitating
the next phases of North Slope development; promoting
Alaska's resources; and making the permitting system more
efficient, timely, and certain. He shared that discussions
with the oil industry had highlighted the need for
permitting reform within the state. He stated that the bill
aimed to provide a statutory change to the Division of Oil
and Gas so that it could provide public notice of oil and
gas exploration and development phases across geographic
areas without regard to lease boundaries. He believed that
this would allow a comprehensive review of oil and gas
activities before exploration or development began, while
protecting the public interest with public notice and an
opportunity to comment during review phases. Additionally,
the project approval process would be streamlined by the
elimination of redundant elements. He offered that DNR
could achieve permitting reform while still maintaining the
highest standards in environmental protection. He addressed
several issues that were raise in prior committee hearings.
He thought that the changes proposed by the legislation
would provide the opportunity for public input at the
beginning of each phase of exploration and development,
which was the time when such input would be most
meaningful. He said that DNR had been working closely with
the North Slope Borough on integrating the permitting
processes and information exchange. He added that the
permitting process would present an initial plan and that
the public would have significant input at that stage;
laying out parameters of exploration and mitigation
measures.
9:15:52 AM
Commissioner Sullivan relayed that is was legally possible
that the department already had statutory authority to
approve the exploration and development; however, the
department decided to come directly to the legislature to
seek direct authority to stave off questions of legality in
the future. He pointed to a recent ruling by the Alaska
Supreme Court in the case of Red Oil v. Sullivan and stated
that he would be glad to answer questions regarding how DNR
viewed the ruling, as well as its effect on the bill; he
offered that the preliminary analysis indicated that the
ruling would not affect the legislation.
9:18:57 AM
Co-Chair Meyer stated that he was unfamiliar with the court
ruling and requested further explanation.
Commissioner Sullivan responded that there had been a
Superior Court ruling dictating that DNR was required to do
a best interest finding at each stage of a project's
development. He stated that the ruling would add years to
the permitting process of undertaking resource development
in the state. He concluded that the group of people that
bought the case forward was against any development in the
state. He related that the Supreme Court reversed the
Superior Court's decision with the caveat the DNR examine
cumulative impacts with regard to the development of oil
and gas areas. He shared that the plaintiffs had wanted DNR
to do a full National Environmental Policy Act (NEPA)
review of cumulative environmental impact; DNR argued that
such a formal review was not necessary. The Supreme Court
agreed that a less formal, "hard look" should be taken. The
Supreme Court had left the details of how the review should
be conducted in the power of the legislature. He thought
the bill was consistent with the court ruling; however, DNR
was still attempting to clarify the ruling.
9:24:27 AM
Co-Chair Meyer noted that he had a copy of the ruling.
9:24:36 AM
Co-Chair Kelly asked which section of the Alaska State
Constitution dictated that DNR had to perform the
cumulative impact study.
Commissioner Sullivan responded that language that spoke to
the cumulative impact requirement held in Article 8.
9:27:03 AM
Senator Hoffman pointed to page 1, lines 7, 8, and 9. He
queried the language on line 7, "without regard to lease
boundaries." He wondered what would be accomplished by the
10 year retroactivity of the leasing program. He noted
that the people of Bristol Bay had similar concerns as the
people on the North Slope because of the value of the Red
Salmon fishery. He asked if DNR had talked with the people
of Bristol Bay about the legislation.
Commissioner Sullivan replied no. He said that the bill
would largely impact the North Slope. He said that DNR had
focused on the North Slope for community outreach and had
not briefed the people of Bristol Bay. He stressed that the
bill would only affect areas where there were current oil
and gas lease sales in the state. He noted that another
area that could be impacted was Cook Inlet.
9:30:18 AM
WILLIAM BARRON, DIRECTOR, DIVISION OF OIL AND GAS,
DEPARTMENT OF NATURAL RESOURCES, offered that the
presentation would provide answers the Senator's questions.
9:30:57 AM
Mr. Barron related that the division was attempting to
approach all projects in a more holistic manner through
program management rather than isolated project management.
9:32:59 AM
WENDY WOOLF, DIVISION OF OIL AND GAS, DEPARTMENT OF NATURAL
RESOURCES (via teleconference), stated that SB 59 would
allow the Division of Oil and Gas to look at exploration
holistically in a geographic area. She directed committee
attention to the presentation, " SB 59: Oil & Gas
Exploration and Development Approval By Geographical
Area"(copy on file).
9:33:31 AM
Ms. Woolf discussed Slide 2, which illustrated the five
areas that the department offered area-wide oil and gas
lease sales: Beaufort Sea, North Slope, North Slope
Foothills, Cook Inlet, and Alaska Peninsula. She stated
that there was not an area in the Bristol Bay Region
currently under discussion and that the closest would be
the Alaska Peninsula.
9:34:20 AM
Ms. Woolf stated that SB 59 would make a statutory
requirement to provide public notice at the beginning of a
multi-stage project and clarified that DNR would review
each phase across a geographic area, rather than conducting
finite reviews for each individual project. She said that
this would bring certainty to the public and to industry as
to the type of activities that could occur in the
geographic area.
9:35:17 AM
Ms. Woolf spoke to Slide 4:
What does SB 59 do?
•It clarifies the Department of Natural Resources can
authorize oil and gas exploration and development
activities within a geographical area.
•It preserves public notice and review at the
beginning of an exploration or development phase.
•It ensures certainty when an approval has been
granted for exploration or development activities.
What does SB 59 do? How does this benefit the public?
•It allows the public to comprehensively evaluate oil
and gas activities within a geographical area.
•It provides an opportunity for input at the beginning
of an exploration or development phase.
•It safeguards environmental concerns through special
stipulations and conditions.
How does this benefit industry?
•It allows a project to be planned within approved
parameters and conditions.
•It provides certainty that plans of operations
meeting those defined criteria can proceed.
•It ensures predictable project approvals for
subsequent exploration or development activity.
9:36:35 AM
Ms. Woolf Spoke to slide 5 titled "Oil and Gas Lease Sale
Process":
•Proposed Areawide Oil and Gas Lease Sale
Public Notice and Opportunity to Comment Evaluate
Statutory Criteria Develop Mitigation Measures
•Final Finding of the Director to Lease Oil and Gas
•Exploration Phase
Public Notice and Opportunity to Comment
•Development Phase
Public Notice and Opportunity to Comment
•Transportation (Pipelines)
Public Notice and Opportunity to Comment
9:38:11 AM
Ms. Woolf spoke to slide 6 titled "Life of an Oil and Gas
Lease":
Year 0
•Final Finding of the Director - Areawide Oil and Gas
Lease Sale
•Lease Issued (10-Year Term)
Year 3
•Initial Exploration - Seismic Program (multiple
leases)
•Public Notice and Comment Period (30 day public
notice)
Year 5
•Lease Plan of Operations - Exploration Well
•Public Notice and Comment Period (30 day public
notice)
Year 6
•Lease Plan of Operations - Exploration Well
•Public Notice and Comment Period (30 day public
notice)
Year 7
•Lease Plan of Development - Conceptual Development
Plan
Year 8
•Lease Plan of Operations - Initial Development Plans
•Public Notice and Comment Period (30 day public
notice)
•Lease Plan of Operations - Modified Development Plans
•Public Notice and Comment Period (30 day public
notice)
•Pipeline Application (AS 38.05.850 or AS 38.35)
•Public Notice and Comment Period (30 day public
notice)
Year 10
•Production
•Lease Plan of Operations - Additional Development
Plans
•Public Notice and Comment Period (30 day public
notice)
9:41:57 AM
Ms. Woolf continued to Slide 7, "Example Geographical Areas
for Exploration Activities." She related that the types of
activities under discussion were ice roads, ice pads,
portable developing equipment, off-road vehicle use, and
temporary housing. She said that the geographical area
would be defined as including all or a portion of the
statewide lease depending on the type of activity being
considered. She shared that the development of the western
North Slope would be looked at differently than the
development of the area encompassing Prudhoe. She stated
that exploration activities could also be examined in the
undeveloped shale areas so that the public could provide
input before development began.
Ms. Woolf discussed Slide 8, "Example Geographical Areas
for Development Activities." She stated that development
involved more specific activities which would focus on a
small group of leases. She relayed that the decision would
address the development across an entire areas so that the
public could address the entire area that could be
affected. She added that small additions to already
existing larger developments would be subject to public
comment. She stressed that all of the areas were
hypothetical.
9:46:10 AM
Ms. Woolf addressed Slide 9, "Life of an Oil and Gas Lease
under SB 59":
Year 0
•Final Finding of the Director - Areawide Oil and Gas
Lease Sale
•Lease Issued (10-Year Term)
Lessee develops exploration plans
Year 3
•Initial Exploration - Seismic Program (multiple
leases)
•Public Notice and Comment Period (30 day public
notice)
Year 5
•Lease Plan of Operations - Exploration Well
•Public Notice and Comment Period (30 day public
notice)
Year 6
•Lease Plan of Operations - Exploration Well
Exploration Phase Public Notice & Comment Period
(30 day public notice)
Saves 60 to 90 days for each project in the
geographical area
Discovery - Lessee formulates development plan
Year 7
•Lease Plan of Development - Conceptual Development
Plan
Year 8
•Lease Plan of Operations - Initial Development Plans
•Public Notice and Comment Period (30 day public
notice)
•Lease Plan of Operations - Modified Development Plans
•Public Notice and Comment Period (30 day public
notice)
•Pipeline Application (AS 38.05.850 or AS 38.35)
•Public Notice and Comment Period (30-60 day public
notice)
Year 10
•Production
•Lease Plan of Operations - Additional Development
Plans
Development Phase Public Notice & Comment Period
(30 day public notice)
Saves 60 to 90 days for each project in the
geographical area
9:50:55 AM
Ms. Woolf spoke to Slide 10, "Results":
Exploration Phase Public Notice & Comment Period
•SB 59 provides for a comprehensive review before
exploration or development.
•SB 59 preserves public participation in the
process.
•SB 59 allows stipulations to be approved before
a company develops site specific plans for
exploration or development activities.
Development Phase Public Notice & Comment Period
Ms. Woolf reiterated that the bill would give all parties;
public, state, federal, local agencies and industry and
opportunity to review and evaluate oil and gas activities
holistically and across a defined area, which would bring
certainty as to how state lands were developed for oil and
gas. She explained that the division would define a
geographical area for exploration and then prepare public
notice. She relayed that the public notice would include
the type of exploration activities and any special
stipulations, and following public comment, the plan would
be approved. Once the exploration phase was approved the
division could proceed to approve the substantive plans of
operation for exploration activities that were in
compliance with the specified conditions in the exploration
phase approval, without additional public notice. She
shared that all the individual plans of operation could
proceed without public notice, but they would have agency
review and department approval. She explained that the
development phase would follow similar suit.
9:53:15 AM
Co-Chair Kelly noted that the lease plan slides showed
approximately 10 years from exploration to development. He
wondered if the legislation would speed up the process.
Mr. Barron responded that it could take from 1 year on up.
He stated that the drilling seasons on the North Slope
could be accelerated. He explained that the bill would work
across 3x3 leases and that the leases were limited in the
primary term for up to 10 years. He hoped that activities
could be done concurrently between two different companies
in the same geographic area. He thought that the
legislation would save time for every company working
within the specific geographic area.
9:55:03 AM
Commissioner Sullivan interjected that when there was
public notice and comment the companies would need to have
time to respond, which could take some time. He stressed
that DNR was attempting to make the development more
strategic by minimizing the public comment opportunities
after the initial permitting requirements were met.
9:56:10 AM
Mr. Barron replied that the division hoped to develop
projects in a 5 to 7 year period, rather than 10 years.
9:56:47 AM
Senator Bishop surmised that the statutes already allowed
for industry and the department to work together, but that
the bill was expected to offer more certainty for industry.
He understood that the goal was to maximize the state's
assets, while still maintaining due diligence to the public
process and the environment. He discussed his experience on
the North Slope and stressed that time was of the essence
when it came to the work being done in the area.
Commissioner Sullivan agreed, but added that bringing
certainty to the process at the outset would help with the
investment climate. He offered that the timelines and the
uncertainty were limited to the winter season for the most
part and that if you compared Alaska to Texas or North
Dakota, it was a disadvantage. He offered that the bill
would the provide DNR with clear authorization and would
help in the issue.
10:00:31 AM
Co-Chair Kelly noted the state got "slammed" with lawsuits
every time it tried to anything development related. He
thought that the courts had rejected direction from the
legislature. He reiterated for the record that the
committee was trying to collapse the timeframe that it took
to get projects to meet completion. He expressed a lack of
respect for the court system and opined that judges wanted
to be legislators. He contended that it was not the job of
the courts to set public policy.
Commissioner Sullivan suggested that the intent of the
legislation was to define how to expedite the leasing
process, which the courts had stated was in the realm of
the legislature. He said the department would not allow the
REDOIL case to hinder resource development in the state.
10:02:56 AM
Senator Hoffman requested a clarification regarding the
approval of the oil and gas or gas only leases the up to 10
years prior.
Mr. Barron replied that the intent of the 10 years was to
provide a period of time that the director could not
exceeded. He added that there was a 10 year statutory
primary lease term.
10:04:03 AM
Senator Hoffman pointed to page 2 of the bill and the
immediate effective date; however, the fiscal note had a
different date. He inquired why there was a specific date
in the analysis but not in the legislation.
Ms. Barron replied that the intent of the fiscal note was
to give the department the proper resources to establish
the program and regulations.
10:05:00 AM
AT EASE
10:09:40 AM
RECONVENED
Co-Chair Meyer OPENED public testimony.
10:10:07 AM
JAMES SULLIVAN, SOUTHEAST ALASKA CONSERVATION COUNCIL,
expressed concern with the legislation. He acknowledged the
at an exploration stage the intent was that the land be
explored; however the council had problems with only one
comment period at the development stage. He offered that
the council had an issue with the redefining of a
geographic area, particularly multi-use areas. He pointed
out that anytime there was a planned development that would
affect the people living in the area, there should be an
appropriate notice and access to adequate information on
the project. He stated that in Cook Inlet the public the
possible effects of a particular project could not be
projected into the future. He stressed that plans could
change and contended that once a company reached the
development stage it would be impossible to predict
possible disasters. He understood that efficiency was an
important part of the permitting process, but felt that
bill created uncertainty, and put the onus on the public to
speculate what could happen. He added that the state was
planning to move into shale development and that DNR might
have to make changes to its permitting process. He
concluded that the bill did not represent the best approach
for the state.
10:14:53 AM
JACK RODERICK, SELF, ANCHORAGE (via teleconference),
expressed support for SB 59.
10:15:32 AM
Co-Chair Meyer CLOSED the public testimony.
10:15:42 AM
Co-Chair Meyer discussed the fiscal note attached to the
bill.
10:16:17 AM
SB 59 was HEARD and HELD in committee for further
consideration.
AT EASE
10:19:22 AM
RECONVENED